FIRST ADVANTAGE PRIVATE LIMITED,MUMBAI V. PRINCIPAL COMMISSIONER OF INCOME TAX, MUMBAI - 4, MUMBAI

ITA 3291/MUM/2025

AI Insights

The case involves First Advantage Private Limited, which appealed against the order of the Principal Commissioner of Income Tax, Mumbai-4, concerning the assessment year 2020-21. The Principal Commissioner had set aside the original assessment order, believing it to be erroneous and prejudicial to the interest of the revenue, particularly regarding the deduction claimed under Section 80G for CSR expenses. The Tribunal examined whether the Principal Commissioner's intervention was justified under Section 263 of the Income Tax Act, considering the original assessment had allowed the deduction after scrutiny. The Tribunal noted that the issue was debatable and had been consistently viewed by different benches of the Tribunal in favor of allowing such deductions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668992 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2020-2021
• Other Referred Cases: Motilal Oswal Securities Ltd. (ITA No. 1795/Mum/2023, order dated 18.08.2023), Allegis Services India Pvt. Ltd. (ITA No. 1693/Bang/2019), JMS Mining Pvt. Ltd. [130 taxmann.com 118 (Kolkata Trib.)], Elan Pharma (India) Pvt. Ltd. vs. PCIT in ITA No. 2419/Mum/2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAGIRATH RAMAWAT; DR
• Assessee Lawyers: NITESH JOSHI SONAKSHI JHUNJHUNWALA; ARS
• Keywords: Set aside; Difference of opinion; Change of opinion; Business expenditure; Revision of order
• Section: 143(3); 142(1); 263; 37; 115JB; 80G

Judgement Text

" | आयकर अपील य अ धकरण यायपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER & SHRI SANDEEP SINGH KARHAIL, HON’BLE JUDICIAL MEMBER I.T.A. No. 3291/Mum/2025 Assessment Year: 2020-21 First Advantage Private Limited 12th Floor, Suite No. 002 Oberoi Commerz 1, Oberoi Gander City, Goregaon East Mumbai - 400063 [PAN: AAACQ0706E] Vs Principal Commissioner of Income Tax, Mumbai – 4, Mumbai अपीलाथ\u0012/ (Appellant) \u0014\u0015 यथ\u0012/ (Respondent) Assessee by : Shri Nitesh Joshi/Ms. Sonakshi Jhunjhunwala, A/Rs Revenue by : Shri Bhagirath Ramawat, Sr. D/R सुनवाई क तार ख/Date of Hearing : 24/06/2024 घोषणा क तार ख /Date of Pronouncement: 25/06/2024 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order of the ld. Principal Commissioner of Income Tax, Mumbai- 4 [hereinafter “the ld. Pr. CIT”] dated 21/03/2025 pertaining to AY 2020-21 framed u/s 263 of the Income-tax Act, 1961 (hereinafter ‘the Act’). 2. The sum and substance of the grievance of the assessee is that the ld. Pr. CIT erred in assuming jurisdiction conferred upon him by the provisions of Section 263 of the Act and further erred in holding that the assessment order dated 29/09/2022 framed u/s 143(3) of the Act is erroneous inasmuch as it is prejudicial to the interest of the revenue. 3. Representatives of both the sides were heard at length, case records carefully perused and with the assistance of the Counsels, the I.T.A. No. 3291/Mum/2025 2 relevant documentary evidence brought on record, duly considered in the light of Rule 18(6) of the ITAT Rules, 1963. 4. Briefly stated the facts of the case are that the assessee is engaged in the business of Comprehensive, Systematic, Consistent Object, Well Documented quest research pre-employment screening program. Assessee is a wholly-owned subsidiary of First Advantage Pvt Limited, Singapore (‘FADV Singapore’) and is part of the First Advantage (FADV) Group. The assessee filed its return of income on 22/01/2021 declaring total income at Rs. 42,97,82,030/- under the normal provisions and Rs. 31,40,82,502/- u/s 115JB of the Act. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. 5. The notice dated 29/06/2021 issued u/s 143(2) of the Act, included one of the clarifications required initially relating to deduction from total income under Chapter VIA. Vide notice 16/12/2021 issued u/s 142(1) of the Act, annexed with the questionnaire, question no. 3 was stated as “3) Please give details of deduction claimed of Rs. 91,91,000/- u/s. 80G of the Income Tax Act, 1961 with documentary evidence\", to which the assessee filed reply dated 18/01/2022 and furnished the necessary details in respect of deduction u/s 80G of the Act. 5.1. Facts on record show that the assessee charged its profit and loss account by Rs. 34,91,000/- as contribution towards CSR expenses and added back the same in its computation of income. The assessee has also paid Rs. 57,00,000/- but since it was not charged to profit and loss account, the same was claimed as deduction u/s 80G of the Act along I.T.A. No. 3291/Mum/2025 3 with deduction of Rs. 34,91,000/-. The AO examined the claim and allowed the deduction. 6. Assuming jurisdiction conferred upon him by the provisions of Section 263 of the Act, the ld. Pr. CIT issued a showcause notice, which reads as under:- I.T.A. No. 3291/Mum/2025 4 6.1. The assessee attended the proceedings and reiterated its claim of deduction u/s 80G of the Act. However, the ld. Pr. CIT was of the firm I.T.A. No. 3291/Mum/2025 5 belief that CSR expenses are mandatory in nature and incurred by virtue of compliance to Section 135 of the Companies Act, 2013 read with Schedule VII of the Companies Rules, 2014 and Explanation 2 to Section 37 of the Act mandates that CSR expenses shall not be allowed as business expenditure. The ld. Pr. CIT was further of the belief that donation has to be voluntary and since the CSR expenses are statutory obligation, cannot be considered as voluntary donation. On such belief, the ld. Pr. CIT was of the opinion that the assessment order dated 29/09/2022 is erroneous and prejudicial to the interest of the revenue and accordingly set aside the same and directed the AO to enquire the claim of Section 80G deduction out of the CSR expenses and modify the assessment order as per findings given by him. 7. We have given a thoughtful consideration to the observations made by the ld. Pr. CIT. The undisputed facts is that the claim was thoroughly examined during the course of scrutiny assessment proceedings and after thoroughly examining the claim, the AO took a view and allowed the claim as deduction u/s 80G of the Act. 8. We have given a thoughtful consideration to the order of the ld. Pr. CIT. We are of the considered view that the issue raised by the ld. Pr. CIT is a highly debatable issue as the Co-ordinate Benches of the Tribunal have taken a consistent view that CSR expenditure can be claimed as expenditure u/s 80G of the Act in the cases of Motilal Oswal Securities Ltd. (ITA No. 1795/Mum/2023, order dated 18.08.2023), Allegis Services India Pvt. Ltd. (ITA No. 1693/Bang/2019), JMS Mining Pvt. Ltd. [130 taxmann.com 118 (Kolkata Trib.)] and Elan Pharma (India) Pvt. Ltd. vs. PCIT in ITA No. 2419/Mum/2025. I.T.A. No. 3291/Mum/2025 6 9. As the issue is highly debatable, any view taken by the AO during the course of original assessment proceedings has to be considered as a plausible view and the view taken by the ld. Pr. CIT, howsoever plausible, is nothing but a change of opinion for which jurisdiction u/s 263 of the Act cannot be assumed. Considering the facts of the case in totality, we set aside the order of the ld. Pr. CIT and restore that of the AO dated 29/09/2022. 10. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 25th June, 2025 at Mumbai. Sd/- Sd/- (SANDEEP SINGH KARHAIL) (NARENDRA KUMAR BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 25/06/2024 *SC SrPs *SC SrPs *SC SrPs *SC SrPs आदेश क \u0016\u0017त\u0018ल\u001aप अ े\u001aषत /Copy of the Order forwarded to : 1. अपीलाथ! / The Appellant 2. \u0016\"यथ! / The Respondent 3. संबं&धत आयकर आयु(त / Concerned Pr. CIT 4. आयकर आयु(त ) अपील ( / The CIT(A)- 5. \u001aवभागीय \u0016\u0017त\u0017न&ध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड. फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपील य अ&धकरण ITAT, Mumbai "